Extreme Buys Enterasys to Expand Networking Capabilities

Extreme Networks is buying Enterasys Networks in a move that officials hope will strengthen the company’s position in the increasingly competitive data center networking space.

Extreme executives announced the $180 million deal Sept. 12, saying that the goal is to combine the networking assets of the two companies, integrate features of Enterasys’ operating system with Extreme’s ExtremeXOS and within two years to extend Extreme’s operating system throughout Enterasys’s portfolio. The deal should close in the fourth quarter.

The combined company will continue supporting the product road maps of both Extreme and Enterasys, officials said.

“Since its first release in 2004, ExtremeXOS has been developed with a Linux abstraction layer that makes it relatively easy to extend ExtremeXOS to support other vendors' switching hardware," Chuck Berger, who became Extreme’s president and CEO in April, said in a statement. "Combining Enterasys technologies and products, including their Coreflow modular switches, IdentiFi wireless and the NetSight system management application, will extend and complement our product offering, which we expect will provide significant added value to the current customers of both Extreme and Enterasys."

Enterasys, which has about 900 employees and some $330 million in annual revenues, offers a range of wired and wireless networking and security solutions, from switches and routers to its IdentiFi wireless tools to management software. The 13-year-old company on Sept. 10 announced that it is providing WiFi technology throughout the Philadelphia Eagles’ Lincoln Field stadium. The football team also is using Enterasys’ OneFabric Control Center management solution.

Zeus Kerravala, principal analyst with ZK Research, said in a statement that the two vendors bring particular networking strengths to the table, and that the increased scale, larger portfolio and more resources of the combined company will benefit customers.

Extreme officials predict that the combination of the two companies will double the revenues each vendor generated alone. The larger scale will help in such ways as increasing R&D investment, speed up innovation and bring products to market faster.

“Together, Extreme and Enterasyswill unite our products and differentiated skills to offer networks that are truly simple to run and that benefit from our great reputations as innovators,” Jason Lackey, director of corporate marketing, Web and social media strategy at Extreme, said in a post on the company blog. “It takes a lot of experience and hard work to create networks that have all the capabilities necessary for non-stop operation, wired/wireless connectivity, sophisticated management and automated configuration that brings everything into one view.”

Extreme, founded in 1996, offers a range of networking solutions, from switches and routers to network management software to ExtremeXOS, and competes with the likes of Cisco Systems, Juniper Networks and Hewlett-Packard. In July, the company announced fiscal fourth-quarter revenues of $79.5 million, a 9.4 percent decline from the same period last year, and net income of $3.2 million, a drop from the $7.8 million in 2012.

Earlier that month, the company announced it had entered into a reseller partnership with Lenovo, with the server vendor and its partners selling Extreme’s Open Fabric Ethernet switches as part of a converged infrastructure offering. In addition, Extreme officials said their switches had been validated to run with EMC's VSPEX storage offering, which is aimed at cloud and virtualized environments. Both were key moves in Extreme’s efforts to extend its reach into the growing converged infrastructure market.

Both Extreme and Enterasys also have made moves in the burgeoning software-defined networking (SDN) space. Extreme already had brought OpenFlow to its switches, and in February put OpenFlow, OpenStack Quantum and other SDN support into ExtremeXOS. For its part, Enterasys in May introduced OneFabric Connect SDN, which is designed to enable partners to create applications that businesses will use to leverage SDN infrastructures.